How Can Health Insurance Exchanges be Beneficial?

In an effort to reform the existing healthcare problems that exist in the United States, President Obama, along with a number of democrat and some republican lawmakers, came together to create the Affordable Care Act. Although this act is being debated and contested by many opponents, there currently exist many new programs that allow for healthcare benefits. One of those programs is referred to as a health insurance exchange. While it is new, there are several ways that health insurance exchanges can be beneficial.

Origins of Health Insurance Exchanges

Before the act passed and came into law in 2010 there were actually a few exchanges already functioning. The House of Representatives wanted to create a single national exchange, but the Senate passed a state-based exchange network instead. The federal government is supposed to provide a health insurance exchange in the absence of a state Exchange.

Overall, the health insurance exchanges are meant to make healthcare markets more efficient by organizing the system and providing much needed oversight to thwart abuses. The existing system is far too complex for most citizens, which makes costs go up due to disorganization.

Benefits of Health Insurance Exchanges

There are many of benefits for the health insurance exchanges that are starting to pop up in states across the country. As mentioned earlier, the sole problem for most of the healthcare woes in the United States is the lack of organization. The health insurance exchange helps people to organize their healthcare and get better plans for their family.

Most employers do not offer more than a few options for health insurance. Although you may get your own insurance, the private market is quite difficult for unskilled people to learn. There is no bargaining power like your employer has and your insurer can push you around. If you have a past illness then the provider will most certainly increase the prices drastically as well. Many of the private insurers will provide plans that are unnecessary or have loopholes that provide little help to the patients.

However, for those using a health insurance exchange, the options are much different. Within the exchange, there will be dozens of insurance companies competing with different benefits and prices, but all meeting minimum requirements as set for comprehensiveness. The health insurance exchanges offer the choice that you are afforded with private health insurance combined with the bargaining power you might see with an employer. In fact, the exchange will have even higher bargaining power than an employer because of the large base of customers.

Inevitably this all means that the cost of healthcare and the quality of services will increase. Efficiency in this muddled system is exactly what is needed in the healthcare industry. Many reformers have considered the health insurance exchange to be the most important part of Obama’s new Affordable Care Act.

The theory sounds great, but many critics are not convinced. Without evidence that the health insurance exchanges can work on a large scale, many are unwilling to accept this kind of collective bargaining. Free market capitalists do not trust these cooperative groups because they are fearful of the implications.

Exchanges in the Beginning

The health insurance exchanges in the beginning are going to be difficult to garner success with. Many critics are worried that it will never be a success because there will be limited individuals involved at the beginning. This will lead to a lack of bargaining power and ultimately make the exchange fail. Others fear that only the businesses with sick and expensive workers will decide to buy in to the system, which would leave the pool much more expensive and unable to sustain itself. The costs would be even higher with these expensive workers, which would keep other individuals from buying into the system. More importantly, if there is any success, it would have to come from the government’s cooperation with the state exchanges. Many people fear this.

Nevertheless, success has already been shown on a number of levels. The health insurance exchanges in Connecticut and New York have proven themselves capable of helping people find alternatives to their existing healthcare coverage. More importantly, they have shown that small scale models are useful for the nation as a whole.

The health insurance system in the United States is currently confusing and hard to decipher. The health insurance exchange will provide the benefits necessary for Americans to live comfortably with the knowledge that they are in good hands with their coverage.